In our society, being in debt at some point in life feels almost unavoidable. It’s how we buy our homes, cars, and other things that make life enjoyable and comfortable. 

But there’s a dark side to debt. Using it without self-control can make life quite stressful. If you find yourself in a personal debt crisis, don’t fret – you can fix it. Here are a few tips to get started: 

1) Know what you owe. Resist the urge to avoid your debt. Pull your credit report from all three credit bureaus for an accurate view of your total amount owed as well as your overall FICO score. 

2) Put it on paper. Use your credit report as a starting point to create a plan. Document what you owe, to whom you owe it, and other important details about each debt, like: your interest rates; the minimum monthly payments, the due date, the total balance owed, any early payment penalties, etc. 

3) Create a calendar. Once you have a full picture of your debt, try creating a calendar that tracks your financial obligations each month. 

– First, start by plugging in your pay dates and the amount you typically you receive each pay period.

– Then, note your monthly living expenses and their due dates. In addition to fixed expenses (like rent, cell phone and cable), be sure to also include variable expenses like groceries, utilities, gasoline, etc.

– Finally, plug in your debt, noting when each bill is due, and the minimum payment required.

4) Pay on time, every time. It’s a basic principle in money management: Never, ever, ever miss a payment. Even if you’re only able to pay the bare minimum, pay it on time. Late payments will accrue unnecessary additional fees, increase your overall debt, and damage your credit history. If an unexpected, but necessary, expense leaves you strapped for cash one month, contact your creditors directly to see if they can work with you. Building a solid reputation of on-time payments may work in your favor when the unexpected happens.

5) Tackle one debt at a time. If the goal is to pay off several creditors, try focusing on one at a time. Start with the debt with the highest interest rate (usually credit cards). Double the payment each month on the first card, while continuing to pay the minimum payment on everything else. Once you’ve paid off one debt, move on to the next one. As you pay off each account, you’ll have more money each month to put towards the next debt on your list.

6) Get some help. There are several free apps, like Mintand You Need a Budget, that can help you achieve your goal. Your bank may also offer complimentary credit counseling and money management tools.

As overwhelming as it may seem, getting out of debt is not impossible. With consistency, focused effort and a bit of strategy, you CAN take control of finances and reduce your debt. 

 

 

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About the Author:

Danielle Flynn

As a Movement Bank blog contributor, Danielle Flynn gets to mix her healthy obsession for creative, high-quality writing with a background in financial services. She's a native Charlottean and UNC Charlotte grad who splits her writing time with wedding and event planning. When she's not working, Danielle volunteers in a weekly Bible education ministry and enjoys traveling the world with her husband and spending time with family and friends.